Saskatchewan, Montana, North Dakota and Wyoming today jointly signed a memorandum of understanding (MOU) on Carbon Capture, Utilization and Storage (CCUS) at the Western Governors’ Association (WGA) meeting in Arizona.

In the MOU, the four governments express a mutual desire to reduce greenhouse gas emissions while aiming to improve strategic and diverse energy production. Accordingly, they will collaborate on CCUS knowledge sharing and capacity building as well as policy and regulatory expertise in the fields of carbon dioxide capture, transportation, storage and applications such as enhanced oil recovery.

With an estimated 1,600 coal-fired power plants planned or under construction in 62 countries around the world, CCUS has been identified as a key technology in the global effort to reduce greenhouse gas emissions. In China alone, 922,000 megawatts of power is produced from coal-fired plants, about seven times Canada’s total electrical generating capacity.

“Our four energy-producing jurisdictions are committed to sharing knowledge on this important technology so that we can manage greenhouse gases responsibly while ensuring our economies continue to grow,” Premier Brad Wall said. “As a world leader in the advancement of CCUS technology, Saskatchewan has much to contribute. SaskPower’s ground-breaking Boundary Dam 3 project is the world’s first commercial power plant with a fully-integrated post-combustion carbon capture system, and an excellent example of what is possible if we embrace CCUS.”

Wall noted that Boundary Dam 3 captured 85,000 tonnes of carbon dioxide (CO2) in October, the highest monthly total since the carbon capture unit began operations in October 2014. Altogether, BD3 has captured 1.75 million tonnes of CO2 since start up, the equivalent emissions of 440,000 vehicles.

According to the International Energy Agency (IEA), CCUS could deliver 13 per cent of the cumulative emissions reductions needed by 2050 to limit the global increase in temperature to 2oC.

“As states and as a nation we need to prioritize research into carbon capture if we are going to confront climate change and take full advantage of our existing resources,” Montana Governor Steve Bullock said. “Done right, we can drive economic growth and create and maintain good-paying jobs across the region. The bottom line for me is we should be in control of our energy futures, and that includes the important work accomplished through this MOU.”

“By harnessing our collective expertise and technology, we can show it’s possible to grow energy production and the economy while reducing emissions through increased innovation rather than expanded regulation,” North Dakota Governor Doug Burgum said. “In a carbon-constrained world, improved CCUS technologies will enable our lignite industry to provide reliable baseload generation for decades to come, while also potentially helping us recover billions of barrels of oil through enhanced recovery methods – turning carbon dioxide from an unpopular byproduct into a valuable product.”

“This MOU builds upon the investments Wyoming has made in energy research and carbon management,” Wyoming Governor Matt Mead said. “Wyoming is home to groundbreaking research at the School of Energy Resources, the Integrated Test Center and the Enhanced Oil Recovery Institute. We are also working on a first of its kind project to develop statewide pipeline corridors that further CCUS efforts. Wyoming looks forward to the opportunity, under this MOU, to work with Saskatchewan, Montana and North Dakota to find ways to commercialize carbon technologies and ensure the long-term viability of our fossil energy resources.”The initiative highlights the value of jurisdictions using strategic partnerships on areas of shared interest.

The parties hope the information sharing and exchange will both expand their respective use of CCUS and lead to its potential wider deployment in North America and internationally.

The three-year MOU will also encourage the immediate engagement of CCUS-related organizations in the four jurisdictions, prioritize joint co-operative projects and ensure a formal evaluation process of activities and accomplishments. -30-

QUOTE: "The predominant reason for the CCS to go ahead appears to be to recover more oil from south east Saskatchewan and reward the oil producing companies rather than adopting appropriate carbon pricing, and moving forward more rapidly on a menu of renewable energy options." . . .

The fate of carbon capture and storage in Saskatchewan is coming to a crucial decision point.

SaskPower and the provincial government must soon decide the future of the technology in Saskatchewan, as two units at Boundary Dam must either be retired or retrofitted to capture carbon by 2020.

"We face a choice right now," said Brett Dolter, a post-doctoral ecological economist at the University of Regina.

"If we continue down the path of investing in carbon capture and storage, we know that's going to increase electricity costs relative to what they would be if we took another path."

Dolter is working on a report on the future of generating power using coal plants with carbon capture technology in Saskatchewan, and whether the province should continue to invest in the technology.

Coal plants still make up the biggest chunk of Saskatchewan's power grid. According to SaskPower, 40 per cent of the province's electricity came from coal in 2016.

In November 2015, SaskPower and the Saskatchewan government pledged that 50 per cent of Saskatchewan's energy would come from renewable sources by 2030.

Even meeting that goal, SaskPower would still need 3,500 megawatts of energy provided by non-renewable sources.

Dolter says in order to meet federal regulations, SaskPower will need to make some decisions about how to bring down emissions. The company is faced with the choice of either retrofitting coal plants with carbon capture and storage (CCS) or generating that electricity some other way.

Cleaning up coal

Coal is vital in Saskatchewan's current energy grid, but coal plants are heavy polluters.

To meet federal regulations, Saskatchewan's coal plants must decrease the amount of carbon dioxide they emit per gigawatt hour of energy produced by 62 per cent by 2025.

That reduction would mean plants would be considered as "clean as gas," as that is the amount of CO2 an efficient gas plant emits.

Carbon capture and storage was one way SaskPower could continue using coal after 2030, but Saskatchewan's current use of the technology hasn't met expectations.

It was originally claimed that the Boundary Dam facility, outfitted with CCS technology, would be capable of capturing up to 90 per cent of its carbon emissions — the equivalent of taking about 250,000 cars off the road.

"A carbon capture plant, on paper, could capture as much as 90 per cent of emissions. And if it does that, then it's beating gas," said Dolter.

However, the plant has captured 1.75 million tonnes since start up instead of the three million tonnes expected.

SaskPower's actual capture target for the facility's emissions of 65 per cent is not being met on average, either.

Jonathan Tremblay, SaskPower's spokesperson, said the 65 per cent target is designed to ensure SaskPower is capturing enough CO2 to sell, and to meet federal regulations that say coal-fired plants must emit no more than 420 tonnes of CO2 per gigawatt hour by 2025.

"If you're capturing less than that, you're actually still releasing more emissions than a natural gas combined cycle plant would," said Dolter.

According to data from SaskPower, the facility has been capturing just over 46 per cent of its emissions on average since January 2015.

(CHART: Boundary Dam Volume Captured - On average, Boundary Dam has been capturing just over 46 per cent of its CO2 emissions since January 2015. (Chartbuilder))

Natural gas option

Dolter said SaskPower could build six times as much natural gas capacity for the same cost as equipping one more coal plant with CCS.

The Boundary Dam 3 project cost nearly $1.5 billion, and it produces about 115 megawatts of energy on average.

According to Dolter's calculations, moving to natural gas power generation would come at about 16 per cent of the cost of relying on CCS.

Using Dolter's calculations for costs for construction, it would cost around $2.7 billion to replace all remaining coal-fired plants with natural gas plants, while it would cost around $17 billion to retrofit all coal-fired plants with carbon capture and storage.

It's not just construction costs that matter, either.

Dolter said the levelized costs of electricity should also be taken into account. That considers all costs related to the construction and operation of a project.

Using that measure, Boundary Dam generates electricity at a cost of $140 per megawatt hour, while a natural gas combined cycle plant generates electricity at a cost of $60 to $70 per megawatt hour.

One reason for the lower cost of operating natural gas plants is that natural gas prices have been low since 2009, although prices have historically been volatile.

An economic benefit for carbon capture and storage is that carbon dioxide is also used in enhanced oil recovery, leading to more oil production in Weyburn's oil fields.

"You'd probably expect $14 million in royalties to come to the Saskatchewan government. So that's a good benefit to the province, and there's employment in those industries," said Dolter.

He said that if the government shuffled those royalties back to SaskPower, it would bring down the cost of Boundary Dam to $120 per megawatt hour — still more expensive than gas.

Jobs on the line

If Saskatchewan decides not to move forward with CCS technology, that puts around 1,100 people in the coal industry in a precarious position.

According to Dolter and the Westmoreland Coal website, around 536 employees work at the Poplar River and Estevan mines.

Another 573 people work at coal power plants in the province, according to SaskPower.

"The end of coal in Saskatchewan would mean the end of these jobs," said Dolter.

Dolter added that the closing of the Poplar River coal plant would have a devastating impact on the Coronach and Willow Bunch areas, as much of the local working-age population works in the coal-fired power industry.

Dolter said Alberta has promised its coal workers some supports amidst changes in the industry.

The promises include an employment insurance benefit top-up to 75 per cent of their former wage, and free tuition for retraining.

"If Saskatchewan does go the route of phasing out coal, I think probably those workers and many people in the province would want to see those supports in place," Dolter said.

Future of carbon capture

For the costs of CCS to improve, Dolter said it's likely hundreds of projects would need to be built around the world.

But global investment in the technology has been weak.

According to the International Energy Agency, carbon capture and storage made up only 0.1 per cent of the $850 million in low-carbon energy investments in 2016.

"Lessons can undoubtedly be learned by equipping Boundary Dam units 4 and 5 with CCS, but the experience of retrofitting a coal plant does not lend itself to mass production in the same way that solar and wind technologies do," said Dolter.

"The question is, should Saskatchewan be the jurisdiction to absorb the cost of learning?"

But Dolter emphasizes this does not mean CCS is a dead technology, especially as scientists warn that if global temperatures rise by more than 2 C above pre-industrial levels, the consequences will be severe.

"If we're emitting too much and we're beyond the two degrees of warming, we'll actually have to pull carbon dioxide out of the atmosphere. That might be where CCS starts to play a role," said Dolter.

SaskPower is expected to make a final recommendation on CCS to the provincial government by the end of this year or early 2018.